Buying a Salon: How to Survive the Transition

I was communicating with a salon owner who recently purchased a salon with a twenty year reputation and an established staff, all of whom had been working there for 12+ years. Since we all know that takeovers are often followed by turnovers, it should come as no surprise that half of the staff mutinied when confronted with their new employment contracts.

Now, the new salon owner is left with an empty salon.

The purpose of buying an established business is to profit off that reputation. Pre-existing salons come with loyal clients and employees who have generally been there for quite some time. Of course, the employees of this business believe that the clients are their property, especially if many of the clients were referred to the business through word-of-mouth. The new owner believes the clients are hers because she bought the salon specifically because of the reputation and loyal clientele.

What happens when the employees take off with the clients you paid for?

Prior to a purchase, you need to protect yourself. Hire an attorney who specializes in corporate and employment law and have them guide you through the process. It is not abnormal for a salon owner to “sell” a business, steal the employees and clients, and open a competing business nearby. It is also not abnormal for a salon owner to sell a business to avoid prosecution.

YOu require an attorney.

An ideal salon purchase contract will outline the terms of the sale and include full rights to the client database, the seller should be bound to a non-compete agreement and the both the seller and the employees at the salon should be bound by a non-solicitation agreement. (This means that the salon owner cannot open up shop and compete with you immediately after you buy the salon and nether the salon owner nor the existing employees can solicit the clients in any way if they choose to leave the salon.) At the very least, this will allow you to pursue those who might try to steal your new business out from underneath you when you step into the role of the salon’s owner and begin making changes to the workplace.

Additionally, you should do your best to learn everything about the prior owner’s practices before you purchase the salon so you know exactly what you’re up against when you take over. Many salon owners misclassify their employees as independent contractors and commit wage theft. If you are going to inherit that mess, you need to ensure you’re not going to be held responsible for the misdeeds of your predecessor. You will need to know about any current or potential lawsuits against the business, as well as any formal complaints filed against it.

Making Changes

However, if you buy an existing business that is thriving and equipped with employees who enjoy working there, why would you introduce any operational or policy changes at all?

If it isn’t broken, don’t mess with it.

But what if things are broken? What if the owner had everyone misclassified, didn’t enforce a dress code, allowed employees to come and go as they pleased, and made illegal deductions from their wages? Where legal compliance is concerned, you definitely have to make some immediate, serious changes. Your attorney will guide you on the technicalities of that, but here are some tips for introducing these changes and any additional changes to your new employees.

Organize a meeting agenda, deliver it in advance, and have your documentation arranged into packets they can review. When it comes to legal compliance, those changes aren’t optional or negotiable. If the employees are misclassified, their status needs to be corrected immediately. If the owner wasn’t complying with minimum wage laws or was making illegal wage deductions, the very first thing you need to do as the salon’s new owner is fix all of that.

“Most of us had no idea what [being 1099] meant. The new salon owner set aside half a day to talk to us about it and show us how much it was costing us to pay our own taxes. By the time it was over, we weren’t just accepting of the compensation changes, we were adamant about them. I’ll never let anyone classify me as 1099 again.”

Be prepared to explain your obligations as an employer to the employees. Be ready to show them the applicable laws and let them know that you won’t allow their rights to be violated. If they’d prefer to be stolen from and to pay their own employment taxes, they have any number of non-compliant, poorly managed, exploitative salons to choose from–but yours won’t be operating that way anymore. Have all your documentation prepared for that meeting so you can show them you plan to do what’s right by them and right by the business.

The Salon Compensation and Pricing Calculator, an 8-page spreadsheet system that makes salon compensation and pricing calculation as simple as data entry. The best part? The system is enabled with protections to make it impossible to “break” the formulas!

The Salon Compensation and Pricing Guide, a 44-page instruction manual that not only explains how to use the system but also explains every formula so you’re never confused about what the numbers mean or where they came from.

A 9-page Employer Obligations Information Sheet to keep you from making very common life-destroying mistakes.

Be Worth What You Charge, an 11-page checklist and salon evaluation resource.

Ease their concerns. Start the meeting by telling the employees you understand that this is a time of incredible stress and uncertainty for them. Explain to them why you chose the business. You could have established a competing salon, right? Instead, you bought theirs. Did their work ethic impress you? Were you blown away by their exceptional talent? Tell them.

“Our new owner is our biggest fan. The first month, she installed a lighting kit and turned half the laundry room into a selfie studio with a branded backdrop so we could show off our work on Instagram. She’s always telling us how great we are. Our old boss was great, but our new owner is more joyful to work with.”

There’s no guarantee their salon would have been purchased. The salon owner could have ended up closing it altogether, scattering the employees to the wind, but you wanted to keep this particular team together. Let them know why and thank them for giving you a shot.

Be sympathetic. We’ll get into this later, but a lot of the time, employees aren’t made aware of the sale until after-the-fact. The news of the sale often comes as a betrayal.

Some employees will feel like they themselves have been sold, like cattle at a livestock auction. Be understanding of their anxieties, anger, and disappointment. They’ve just had their workplace–their livelihood–turned upside down. The sale has shaken their foundations. Don’t give them further reason to panic.

Don’t be a dictator. If you want to introduce operational or policy changes EVER (not just when you purchase a business), handle it democratically.

“Our new owner showed up her first day with binders–actual binders–full of rules, new policies, and new employee handbooks. It was twenty-seven pages long. We were told to sign it that afternoon or pack up and leave. All six of us quit. It wasn’t even that the policies were bad or anything, but her approach totally was. We saw it as a bad sign of things to come.”

Don’t come into a new salon during a time of extreme uncertainty for the employees, lay your law down and say, “This is how it’s going to be,” unless you want those employees to walk out on you.

Ask for their input. The legal compliance isn’t up for debate, but everything else is. While employees are certainly not as invested in the salon as you are, staff members who are on any kind of commission-based compensation system generally have significant interest in the welfare of the business since their paychecks are directly affected by any changes you may want to make.

Consult with your employees and ask for their opinions.

This shows that you respect them as professionals and you care about their job satisfaction.

“I always ask my team for their advice, especially during those first few months. They knew the clients and the business far better than I did. Every day, I am impressed with their ingenuity and acumen. I tell them often that I couldn’t run this business without them, and I mean it. Many of their ideas are better than my own.”

You might be surprised with the solutions employees propose to the issues that you’re addressing. They may come up with a compromise that works for everyone that you hadn’t even considered.

Give them time. Aside from the changes required to ensure legal compliance, put a start date on any other policy changes. If you’re going to require uniforms or a new dress code, give them two weeks notice. Tell them that if they disagree with the changes you’re implementing, it’s totally cool–they have two weeks to find another job. Some employees hate structure and order. They prefer laid-back salons that don’t function as typical businesses, and that’s okay. If their ideal workplace isn’t the workplace you plan to cultivate, give them time to find one that better suits their professional values (or lack thereof). There’s no reason for employees to separate from their employment with you on bad terms unless they’ve done something really egregious.

It should go without saying that you should have the client database locked up tight and all of the employees’ signatures on that non-solicitation agreement.

Be ready to send toxic employees packing. If someone becomes hostile or defiant, be prepared to cut them their last paycheck and send them out the door. I firmly believe adults should know how to behave in professional settings.

Rules to Implement

I have a few rules employees cannot violate and I recommend that you adopt them too, and keep them in mind during your meetings.

1.) I don’t repeat myself. If I have to tell you not to do something more than once or if I have written you up for an infraction previously–and you’ve done it a second time–you’re likely to lose your job.2.) I don’t tolerate tantrums. If you behave like a smug, entitled, spiteful teenager, you’ll be sent packing. You slam a door, toss things about the salon, yell at people, or stomp out of the shop, you’re not walking back in as an employee of it ever again.3.) I respect my employees, so I expect the same in return. If you run your mouth off at or about me, insult me, make personal attacks against me, or treat me in any way other than how I treat you–you’re gone. I’m nobody’s bitch.4.) I don’t allow anyone to abuse my team. “Anyone” includes clients and other employees. Clients who treat my employees like servants or garbage are told not to return. The same applies to employees who disrespect, belittle, backstab, gossip, sabotage, verbally abuse, or physically assault other employees.

Employees must understand that you aren’t their mother. It’s not your job to teach them how to behave.

Primarily, I expect people to act like adults. None of us goes to work to babysit grown people. If anyone on your team is working to divide your employees, undermine you, or challenge your authority, they need to go.
Not at the end of the day.
Not tomorrow.
Not at the end of the pay period.
Right. Now.

“Two of the employees were really bitchy during my first team meeting. I should have fired them for it, but I didn’t want to make a bad impression and risk a walk-out. Three weeks later, they took the client database and half of my employees to go open a new salon. The employees that stayed treated me like crap and it was my fault because I let it happen. I ended up having to fire everyone and start over.”

Be ready for it. During business transfers salon owners often have to fire at least one of the employees. If you know who your salon’s shit disturber is, get them in your office immediately after the meeting concludes. If their behavior is really out of control, stop the meeting and get them in private right at that moment.

Never allow a troublesome employee to set precedents for how you’ll be treated.

I’m a firm believer that discipline should be instantaneous, especially in these situations. If you have a progressive disciplinary policy, write them up. If you know that writing them up won’t cure the problem, let them go. If you don’t, other employees will get the impression that you’ll allow them to walk on you and violate your expectations at will.

Be available. I recommend holding one-on-one meetings as soon as you can to get to know the employees and to give them an opportunity to ask you questions. Implement an “open door” policy–so long as you’re not in a meeting, any employee should be able to come into your office at any time if they have questions or suggestions.

“Our new owner was chronically unavailable. We kept asking her individually to make time to sit down with us, but she always made excuses. This caused more resentment, as we all felt ignored and unappreciated.”

If employees ask to schedule a meeting with you, make it a priority to set the meeting up ASAP. Too many salon owners blow these meeting requests off, or get sidetracked and forget. Don’t be one of them.

Your employees deserve your time and attention.

Be flexible and patient. Once again, I’ll never understand the psychology of someone who purchases a salon and then wants to overhaul the entire business. (Why buy if you’re going to gut it and rebuild it? Just don’t.) If you have some changes in mind, don’t introduce them all on the first week, or even the first month. Slow it down. Propose and implement the changes a little at a time. For some of the employees, you’re going to be “The Enemy” for at least the first three months. They’ll be skeptical of you, suspicious and distrustful.

“The sale happened without our knowledge. One day it was business as usual, the next day a woman we had never met before was saying she was our boss. For the first six months, we felt like there were knives suspended above our heads. We were waiting for her to start cutting their strings. Every meeting, we would look at each other like, ‘This is when it happens. This is when she starts changing everything we love about this place.'”

This will be especially true if the employees weren’t made aware of the sale. Salon owners often don’t disclose that the business is on the market to their employees–and for good reason. Salon employees know what the chaos of a transfer of power looks like. If they know of the sale, they’re apt to find jobs elsewhere before it happens. It’s understandable that a salon owner would want to keep that secret. What’s not understandable is when the owner disappears immediately after the sale.

Ideally, the previous salon owner will be willing to spend a week with you at the salon after the sale, or at least a few days. They’ll introduce you to the team, explain the situation to them with you, and help you transition into their shoes.

It’s important to let employees know that the only substantial thing changing is who will be signing their paychecks and overseeing the business. Once everything settles, you can begin to implement other changes to the business a little bit at a time. You can group small changes together (for example: client greeting protocols and introduction of an EOD checklist), but space out your big changes (for example: transitioning to new product lines).

Most importantly, when it comes to big changes that significantly affect the professionals and their work (like new product lines), don’t make those decisions yourself–especially if you’re in no way qualified to make them.

“The woman who bought our salon was a stay-at-home-mom with a twenty-year-old marketing degree and no beauty industry experience. A few weeks after she took over, she switched us from [a well-known pro line] to [another pro line known for having great shampoos but shitty color] just because she liked [new company’s] ‘brand identity’ and ‘the way their products smelled.’ All of us are extremely loyal to [the previous brand] and have paid thousands for their classes and workshops over the years. She wouldn’t listen, so half of us quit after that meeting. A few months later, all but two of us had quit because the clients weren’t happy with [new company’s] color quality.”

Don’t be like this salon owner. You have a wealth of knowledge under your roof. Ask them for their preferences and take them into consideration.

Have you ever purchased an existing salon? Has your salon ever been purchased by someone else? Talk about your experiences and share your own tips in the comments! If you want to subscribe to these posts so you don’t miss any, subscribe to our feed to have posts delivered to your email or feed reader, or Like This Ugly Beauty Business on Facebook (make sure you enable notifications, or you’ll miss stuff).

Beauty industry survivalist, salon crisis interventionist, tactical verb-weapon specialist, and the leader of at least a hundred workplace revolutions, Tina Alberino is known as much for her extensive knowledge as for her sarcastic wit and mercilessly straightforward style. She’s the author of the book The Beauty Industry Survival Guide and the blog This Ugly Beauty Business. When she’s not writing, educating, or consulting, she can be found overthinking everything, identifying problems people didn’t know existed, and stubbornly working to change the things she cannot accept.